What will supply chains of the future look like?

By: Christian Enßle, Head of Cluster FMB, Easyfairs Deutschland GmbH, Bielefeld

How will supply chains in the field of mechanical engineering be organised in the future? This one of numerous issues that may need reassessing and readdressing as a consequence of the pandemic.

How strong is the chain?

The pandemic has demonstrated once again how the global movement of goods is susceptible to disruptions. A chain, so the proverb goes, is only as strong as its weakest link. This also means: the longer the (supply) chain, the higher the risk of one of the links showing signs of weakness. For this reason, many large companies, not just those operating in the area of mechanical engineering, are increasingly on the look-out for suppliers from their own country or even from the region – according to the motto “think global, buy local”.

Not to be taken for granted (any more): the free movement of goods

This is also happening against the background of the increasing occurrences of upheavals in the free movement of goods which are beyond the control of industry. Brexit is a good (or bad) example of this, likewise the diverse penalty duties, trade embargos and other measures also employed by the great powers to influence world trade.

Upheavals also in the case of costs

Logistics costs also fluctuate strongly as a result of these influences. And: Many empty containers have been “stranded” in Europe during the pandemic and cannot be re-transported to Asia where they are now needed. The consequence: At the end of November 2020, the transportation of a standard container from Asia to Northern Europe cost 2,000 US dollars, while this figure soared to 9,000 US dollars at the end of January. This increases the costs for bought-in parts from Asia.

Why roam far and wide ...

The logical consequence: When mechanical engineering companies are on the look-out for proficient suppliers, their search is increasingly focused on companies in the region. The fact that this can be a real recipe for success is demonstrated by the region East Westphalia-Lippe (OWL). The high concentration of suppliers from all disciplines is one of the reasons why the second-strongest cluster of mechanical engineering companies in Europe was able to develop here (in first place: Baden-Württemberg). Mechanical engineering companies find suppliers here who do not deliver their parts in shipping containers but who value direct collaboration.

“Matchmaking” has had to take a break

Unfortunately, the pandemic has brought about an abrupt interruption of face-to-face communication between mechanical engineering companies and suppliers – both in OWL and elsewhere. Existing business relationships can be cultivated, establishing new ones, on the other hand, is difficult. Suppliers are adversely affected by this: They have no access to new customers and lack the opportunity to present their innovations. In turn, the mechanical engineering companies are not able to make use of these innovations until they have acquainted themselves with these suppliers and their new developments.

Hopes for the autumn

When this situation will change depends on the development of the occurrence of infections. The fact is that those concerned are waiting for such a change to come about.  And the organisers of the FMB are already doing everything in their power to create a platform for face-to-face discussions between mechanical engineering companies and their suppliers in November – safe, personal, compact.

New concepts – put into practice

The concept also involves creating a successful combination comprising online activities and a face-to-face event. Therefore, one thing is already certain: There will be a “B2B match-making service” again, enabling exhibitors and visitors to identify suitable companies and contacts in the run-up to the show and to arrange appointments with them. This will help to reduce the number of contacts and to make the visit to the fair as efficient as possible – with the aim of establishing new contacts (again at last).

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